B-Tech Degree VIII Semester Examination April 2011
Part B
V. What is CRM? Explain
i.
ii.
iii.
Goal of CRM
Phases of CRM
Challenges in implementing CRM
Answer:
CRM (Customer Relationship Management) is defined as
integrated sales, marketing, and service strategy that preclude long
showmanship and that depends on coordinated enterprise-wide
actions. CRM software helps organizations better manage customer
relationships by tracking customer interactions of all types. CRM, a
combination of business process and technology, seeks to understand
a company’s customers from a multifaceted perspective. Research
shows that effective management of customer relationships is a source
of competitive differentiation. When competition is fierce, the best
companies go back to basics: creating value for the customers. Any
advantage based on a company’s product or service innovation is
short lived; instead, continuously creating new value propositions for
customers is key to survival in an increasingly dynamic market.
Goals of CRM
1. Using existing relationships to grow revenue:
This means preparing a comprehensive view of the customer to
maximize his or her relationship with the company through upselling and cross-selling and, at the same time, enhancing
profitability by identifying, attracting, and retaining the best
customers.
2. Using integrated information for excellent services:
By using a customer’s information to better serve his or her needs,
you save the customer time and ease any frustration. For example,
customers shouldn’t have to repeat information to various
departments again and again. Customers should be surprised by
how well you know them.
3. Introducing consistent, replicable channel process and procedures:
With the proliferation of customer contact channels, many more
employees are involved in sales transactions. Regardless of size or
complexity, companies must improve process and procedural
consistency in account management and selling.
Phases of CRM
CRM comprises 3 phases: acquiring, enhancing and retaining. Each
phase supports increased intimacy and understanding between a
company and its customers. Each impacts the customer relationship
differently. These three phases are:
1. Acquiring new customers:
You acquire new customers by promoting your company’s
product and service leadership. You demonstrate how your firm
redefines the industry’s performance boundaries with respect to
convenience and innovation. The value proposition to the
customer is the offer of a superior product backed by excellent
service.
2. Enhancing the profitability of existing customers:
You enhance the relationship by encouraging excellence in
cross-selling and up-selling, thereby deepening and broadening
the relationship. The value proposition to the customers is an
offer of greater convenience at low cost.
3. Retaining profitable customers for life:
Retention focuses on service adaptability-delivering not what
the market wants but what customers want. The value
proposition to the customers is an offer of proactive relationship
that works in his or her best interest. Today, leading companies
focus on retention mush more than on attracting new customers.
Challenges in implementing CRM
Implementing CRM requires a high degree of political, cultural,
and organizational change. Today’s fragmented and departmentally
stove piped approach to managing customer relationships leaves
many organizations impotent. Many organizations lack the
interdepartmental cooperation, collaboration, and compensation
strategies to help them move closer to CRM readiness. Many
executives feel the pain and stress of fragmentation as new sales
become more difficult to come by, customer complaints increase,
existing customers fail to renew business, and before long, revenue
growth and even stock prices flatten or decrease. The response from
many executives is to put pressure on employees to drive revenues or
decrease costs.
Political resistance arises because CRM generally cuts across
autonomous business or functional units that are not typically required
to cooperate with one another. Corporations may bow to political
pressure by allowing individual business units to set their own
strategies, resulting in handling customers differently across lines of
business.
Organizational resistance to CRM is unfortunate but almost
inevitable. The organizational issues companies must tackle to
implement CRM include the following.
 Current inevitable systems work against CRM because they
reward performance that deals with only part of the customer’s
relationship to the company. Most companies today lack
financial incentive programs that promote CRM.
 CRM requires making a careful transition from an existing silocentric infrastructure to an integrated customer-centric
infrastructure. However large enterprises have built, bought, or
inherited a wide variety of CRM applications.
 Organizations with global operations must manage customer
interactions in different languages, time zones, currencies, and
regulatory environments. In this environment, providing
consistent, customized service is difficult to accomplish using
traditional technology.
Part A
d) Write a short note on five stages of e-business design?
Customer
Needs
Integrated
Channels
Products/
Services
Flexible
Infrastructure/
Processes
Outsourced/
In-house Core
Competencies
As new technologies emerge, they affect customer needs by
raising expectations of the possible, and this changing customer needs
influence a company’s business design, requiring it to change it as
well. As a new business design is implemented, it alters the way a
company’s processes work. As a result, process requirements change,
influencing the next generation of technology.
To invent value, managers must reverse the traditional value
chain thinking characteristic of the inside-out model in which
business define themselves in terms of the products they produce.
Often the stimulus for change in the market is a new entrant
perceives customer needs not met by the product offerings of the
game’s current players. The challenger reconfigures the offering and
suddenly starts running away with the business. A customer-centric
business design places customer priorities and requirements first and
know that these continuously change.
The need for an outside-in, customer-centric approach becomes
essential in times of great structural transition in the economy, when
old categories and concepts suddenly become obsolete. A well crafted
business design results from reconfiguring and integrating your
company’s competencies, its market channels, application
infrastructure.
The creation of an e-business design is inextricably linked to the
management of change. Change begins when the organizational mind
thinks in new ways that later translate into and are shaped by new
ways of behaving.